In the property management world, there are tons of different industries where property managers conduct business.
These industries can include residential, storage, commercial, industrial, or a special purpose.
But, within the residential industry, there is another section that contains called multifamily properties.
If you don't know much about the multifamily industry, or simply want to learn more, fear not. In this guide, we will be going over everything that you need to know about these special properties, as well as some of the technologies that should be implemented.
So, to get started, let's go over what a multifamily property consists of.
What is a Multifamily Property?
A multifamily home is any residential property that contains multiple housing units. This could include a duplex, triplex, or anything above that. Other forms of multifamily properties also include townhouses and apartment complexes.
Below we have included a quick overview of each of these kinds of multifamily properties.
A duplex is typically a two-story home that has one family living on each floor. The home will have one front door but each unit will have its own entrance.
A townhouse is a home that is divided into two and one family lives on each side of the division. Both families purchase the unit separately and both homes have a separate entrance.
An apartment complex is a single structure that has at least five or more separate units. Each unit is separated by at least one wall and residents typically share facilities like the pool or gym.
These multifamily homes can be tricky to manage, as you may have completely different tenants in one single home. But, there are also some benefits to investing in them. If done correctly, these property owners can make tons of money off of just one multifamily building.
But is it worth the risk or the work?
We will be discussing that in the next section, where we will go over the pros and cons of investing in multifamily development.
Multifamily Properties: Pros and Cons
In this section, we will be discussing some of the pros and cons of investing in a multifamily property. Potential investors should make sure that these properties fit within their budget and needs. They should also consider all of these factors before making their final decision.
Let's get started with some of the benefits of investing in a multifamily property.
Pros of Investing in Multifamily Properties
Pro: More Cash Flow
Since one property is basically being split between multiple tenants, there is a good chance that the investor will enjoy a higher cash flow. This higher cash flow means that the investor can invest in more properties or simply cover the costs of their own mortgage.
Pro: Larger Pool of Tenants
By investing in a multifamily home, you are purchasing a property with more tenants. This means that there are more ways for you to make back your investment faster than with a single-family home.
However, this could also serve as a drawback because you must keep track of a larger group of tenants. This could get complicated, especially when the property itself needs some repairs or if there is any other problem.
Pro: More Control Over Property and Repairs
This benefit only applies if the property owner plans on living in one of the units. Basically, if the owner is in one of the units, they will be able to discover any maintenance issues faster. This means that they will be able to get to work on any issues much faster than if they lived somewhere remote.
This is very important because it will greatly increase resident satisfaction and will save the manager a ton of time.
Now that we know about some of the benefits of investing in this kind of property, let's find out what some of the drawbacks can be.
Cons of Investing in Multifamily Properties
Con: More Commitment of Time
This, again, especially applies if the landlord is living in one of the units. By being so accessible, landlords may need to put up with tenants constantly knocking at the door. This could be to ask about the property, drop off a rent payment, or even inquire about the new residents.
Con: Larger Purchase Price
Another drawback of investing in a multifamily property is that it is much more expensive at the beginning. This is obviously because the properties are typically much larger than single-family homes, so they are going to cost a lot more money.
At this point, it is also important to consider that there is also a possibility of more profit from the property. So, it's crucial to take your time with this decision and make sure that you make the best one possible.
Responsibility for all Repairs
Since the multifamily home is a larger property, you may end up needing to perform more repairs on it. This is because there are a lot more things that can go wrong in a larger property compared to a smaller property.
Now that we know all about the pros and cons of investing in a multifamily property, let's jump into the future, where technology rules everything. In the next section, we will be going over some of the best technologies to invest in and implement into a multifamily home.
Best Multifamily Home Technologies
One of the difficulties of managing a multifamily home is that there are a larger number of tenants to manage. Not only does the landlord have to get along with the tenants, but the tenants also have to get along with each other.
Also, the landlord needs to make sure that each tenant has their own privacy, as well as feeling safe and secure. The landlord should therefore be able to track everything about the property and the tenants as well.
Below, we have listed some of the essential "smart technology" that should be included in all "smart buildings" to make sure that tenants feel safe and secure.
One of the new technologies of this generation that is one of the most common smart home features are smart locks. Smart locks are used by multifamily operators to secure a household with a pin code or card access.
They are also starting to be used widely for shared facilities, like the swimming pool, to give members unlimited access without the need for a key. In the future, these locks can implement features of artificial intelligence and use facial recognition to allow people in the property.
Although it may seem like a stretch, self-guided tours and virtual tours are becoming increasingly popular for property management. What this consists of is having prospective residents tour the property with virtual reality.
This means that a property owner can conduct tours without even having to be on the property. This piece of business intelligence is extremely beneficial, as it basically allows a property owner to be at two places at once.
Another aspect of the property buying process that is being converted to virtual reality is the leasing process. Typically, property buyers will visit a home and sign a lease with the property owner.
However, things are changing, and they are changing fast. Nowadays, businesses are implementing smart leasing. This feature of the property buying process allows buyers to sign a lease from virtually anywhere. Then, they can be owners of the property without ever even visiting it.
Property Management Software
Another big aspect of multifamily property technology is property management software. Property management software is a product that allows property managers to keep track of every aspect of their properties.
These programs can also use the powers of machine learning and AI technology to predict the profitability of a property. This means a lower risk for your investments and an overall increase in an investor's cash flow.
In conclusion, investing in multifamily properties can be a very tricky thing. There are many pros and cons to consider and can be a risk. There are also tons of technologies that help with the entire process that should be implemented into the properties. Overall, it is a very high-risk, high-reward venture that can really diversify any portfolio.